It means without dividend. When shares are sold ex-dividend, the right to receive the dividend shall remain with the seller.
Suppose, X sells (ex-dividend) 100 shares of a company to Y at Rs 100 per share on 30th March, 1989 on 30th April the company pays a dividend of Rs 3000 on these shares. X has the right to receive this amount of dividend.
Thus, in case of ex-dividend shares, the seller has the claim on dividends which are declared by the company immediately after the sale.
It means with dividend when shares are sold cum-dividend, the right to receive dividend passes to the buyer. Suppose, X sells 100 shares of a company cum-dividend to Y at Rs 100 per share on 30th March, 1989 on 30th April the company pays a dividend of Rs. 3000 on these shares.
Y is entitled to receive this amount of dividend even though his name may not be entered in the books of the company. Thus, in case of cum-dividend, the buyer has the right to claim the dividends declared immediately after the sale.
3. Spot Delivery:
Spot delivery means the securities sold by a member on the stock exchange will be delivered on the spot or immediately after the transaction is made. In a spot delivery contract, settlement is done on the same day or on the next day.
The seller delivers the security and the buyers make the payment on the date the contract is made or on the next day.
Under the Securities Contract (Regulation) Act, 1956, a spot delivery contract is defined as “a contract which provides for the actual delivery of securities and payment of price thereof either on the same day on the date of the contract or on the next day, the actual period taken for the dispatch of securities or the remittance of money.
Therefore, through the post being excluded from the computation of the period aforesaid, if the parties to the contract do not reside in the same town or locality”.
4. Forward Delivery:
A forward delivery contract is one which has to be settled on the fixed settlement date. Settlements in such contracts are usually made once a month. Such contracts are allowed only in cleared securities which are settled through the clearing house.
Forward delivery contracts are generally made for speculative purposes. Therefore, settlements are made by payment of difference in purchase and sale prices. In very few cases, actually delivery of securities is made. Such contracts may be postponed or carried over to the next settlement day.